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Siltronic AG
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Hello, everyone, and welcome to Siltronic's conference call on its Q2 2020 results. Please note that this call is being recorded and streamed on Siltronic's website. The call will be available as an on-demand version later today. Your participation on this call implies your consent with this.At this time, I would like to turn the conference over to Petra Müller, Head of Investor Relations and Communications of Siltronic AG.
Thank you, operator. Welcome, everybody, to our Q2 results presentation. With me are Christoph von Plotho, our CEO; and Rainer Irle, our CFO. Following our usual procedure, Chris will start with some remarks on group results. Rainer will then comment on our key financials, followed by Chris again, updating you on our guidance and current market development. After the introduction, we will be happy to take your questions.Please note that our presentation contains the usual safe harbor statement and applies throughout this call and presentation. Today, we have published all documents relating to our Q2 2020 reporting. They are available on our website.I now turn the call over to Chris for opening remarks.
Good morning, ladies and gentlemen. Let's start with a short update on the effects of the corona pandemic on Siltronic. Health and safety of our employees and partners are always a top priority. Hence, we still have a lot of measures in place to safeguard the well-being of everybody. We have no impact on our production, while the pandemic is still ongoing. As our engineers and also partners are still not able to travel in order to start-up some new equipment, projects are a bit behind schedule. However, we are confident that we will be able to finish most of our projects by end of the year.In our Q1 call, I commented on some increases in freight costs. Situation improved now, and we have no problem in shipping work in process of finished goods. Freight costs are almost back to normal. However, for the full year, we will see a mid-single-digit euro/million burden on the cost side.Q2 was strong with sales well above the first quarter of the year and also well above the second quarter of prior year. Logic business in Q2 was unchanged with strong foundry business, strong server business and inventory levels being okay. Memory business, on the other hand, was still a challenge. In DRAM, we saw more or less flattish raw wafer inventories at customers, but still on a somehow elevated level. We believe that there was not much of a change in NAND inventories. Silicon demand for automotive was still okay in the second quarter. We believe that customers built up inventory over recent months and that we will see a bit of a muted environment in the second half of the year. In Q2, loading was good to very high over all diameters, and we saw flattish price trends quarter-on-quarter. However, ASP for the whole year 2020 will be down compared to 2019. Now let's have a look at our key financials. Q2 came in better than expected, driving our sales to EUR 323 million, nearly 8% up compared to the first quarter. Main driver was higher wafer area sold, while prices were roughly flattish. Our EBITDA came in at EUR 100 million. EBIT was up to EUR 67 million. CapEx was EUR 48 million after EUR 46 million in the first quarter. It mainly relates to capability and capacity expansion projects. Net cash flow came down to EUR 27 million compared to EUR 41 million in the first quarter. Our net financial assets stood at EUR 509 million as at the end of June. Rainer will now explain more in detail our financial performance in the second quarter.
Thank you, Chris, and welcome, everybody. Business in Q2 was stronger than expected. As Chris pointed out, higher volumes were the main driver. Sales reached EUR 323 million and are up 7.7% quarter-on-quarter. FX had basically no impact with the U.S. dollar stable at $1.10.In the first half of the year, we generated sales of EUR 623 million, the decrease of 6.4% versus prior year is due to lower ASP, this could not be compensated by the increase in wafer area and the favorable development of the U.S. dollar, which stood at $1.13 last year. Due to the higher sales volume, cost of sales increased 6% quarter-on-quarter to EUR 224 million. Also, higher scheduled depreciation contributed to the rise in manufacturing costs. However, cost per wafer area was down driven by the seamless execution of our productivity improvement projects. Our gross profit in Q2 increased to EUR 99 million. Gross margin was up from 30% to 31% quarter-on-quarter. Gross profit for the first half was EUR 189 million, 27% below prior year. Gross margin was 30% compared to 39% last year. ASP was significantly higher in the first half of last year. Our selling, R&D and admin expenses of EUR 33 million were on a stable level compared to previous quarters. Next slide shows our FX exposure and sensitivity. $0.01 change in the U.S. dollar equals EUR 6 million more or less revenue per year. H1 had an average of USD 1.10 per euro. If we saw an average of USD 1.17 in the second half of the year, this would translate into EUR 3 million times 7, i.e. EUR 20 million or 3% lower revenue in the second half of the year just due to FX. FX had no impact quarter-on-quarter, currency effects like hedging added up to a positive EUR 0.4 million in Q2 compared to negative EUR 3.4 million in the first quarter. In the half year comparison, we see a positive development of currency effects, while we recorded expenses of EUR 15 million in the first half last year, expense this year only added up to EUR 3 million. As you know, we have changed our hedging strategy a year ago, and we are using collar options in addition to forward. U.S. dollar forward pricing has also improved given the low prime rates in the U.S. If the U.S. dollar will remain at around $1.13, we will see minor effects only from FX hedging in the second half of the year. If, however, the U.S. dollar stays at around $1.17, we will see a small positive result from hedging in the second half of the year. Due to higher volumes, we also saw a very positive development of our earnings sequentially with EBITDA of EUR 100.4 million in Q2, a 90% increase versus Q1. You remember that sales were only up 8%. EBITDA margin was 33 point -- 31.1% and thus very close to Q2 last year with 32.1%. However, if we compare H1 with prior year, you would see a significant decline of nearly 19% in EBITDA. EBITDA margin declined from 34% to 30%.Most important reason was the decline in ASP. However, partially offset by lower cost. EBIT in Q2 came in at EUR 66.9 million with an EBIT margin of 20.7% compared to 17.8% in Q1. Depreciation increased only slightly quarter-on-quarter by EUR 2.6 million. Due travel restrictions, some equipment installations had to be pushed out to later this year. We stick to our depreciation forecast of roughly EUR 140 million for the full year 2020. Tax rate in Q2 was low with 12%, however, significantly up quarter-on-quarter. In Q1, our tax rate was exceptionally low because of deferred tax income and some tax relief relating to corona in the U.S. The low-income tax contributed to the net profit of EUR 60.8 million in Q2. Earnings per share came in at EUR 1.80. In the first half, tax rate was 8% compared to 13% in last year. Net income was EUR 106.8 million compared to EUR 156.1 million in the first half last year. Earnings per share for the half year were EUR 3.12 after EUR 4.66 last year. Dividend of EUR 3 per share was approved by the virtual AGM and EUR 90 million of dividend were paid on June 30. Working capital went up in Q2. Inventories were slightly up EUR 6 million quarter-on-quarter. Trade receivables were up EUR 10 million due to higher sales. Looking at our balance sheet, equity came down to EUR 867 million at the end of June. Equity ratio was 45%. The decrease compared to the end of 2019 is based on the profit, minus the change in pension obligations of EUR 48 million and minus the payment of the dividend of EUR 90 million. The pension provision in Germany was discounted at 1.23% as of June 2020 versus 1.24% as of December. In the U.S., the interest rate was down from 2.98% to 2.46%. Net financial assets came down by EUR 80 million to EUR 509 million, even though we paid EUR 90 million dividend. As of June 2020, pension provision went up by EUR 61 million. This is basically due to the lower interest rate in the U.S. and declining financial markets, which led to a lower valuation of assets, plus the EUR 30 million pension expense that we usually see in the half year. If we used 3% to calculate the DBO, it would be EUR 875 million, leading to a pension provision of EUR 232 million, significantly below the entry in our balance sheet.CapEx in Q2 was EUR 48 million. Most of it related to our capability projects and our 300-millimeter capacity expansion, some of which could not be finished in Q1 due to the discussed travel restrictions. We expect to see further restrictions on construction activities going forward, particularly in Ziguang.Our operating cash flow in Q2 came in at EUR 59 million, following EUR 86 million in Q1. We refunded EUR 17 million of net customer prepayments in Q2. Cash flow for CapEx came down from EUR 66 million in Q1 to EUR 49 million in Q2. Net cash flow in Q2 was EUR 27 million.And with that, I would like to hand over to Chris.
Thank you, Rainer. Now let's have a look into the expectations for the second half of the year. Our assumptions seem to come true that impacts from the corona pandemic will become more visible in the second half of the year. After Q2 being strong in wafer area sold, which was most probably also supported by some inventory buildup in the semi value chain, we will see H2 volume-wise coming back to the pre Q2 level. A smartphone recovery in the second half of the year is possible, but still uncertain. The car industry will, for sure, suffer. As Siltronic is somehow overexposed in the automotive industry, we will feel volume pressure on 200-millimeter and smaller diameters of 150-millimeter and below. 300 epi should stay strong in Q3, and we expect 300-millimeter polished to be roughly stable. However, we still see an elevated raw wafer inventory.The U.S. sanctions towards Huawei are not new, but getting more severe. This could lead to more uncertainties about the development of the 5G infrastructure market. But for sure, it will trigger the Chinese to work even harder on self-sufficiency. However, in the previous years, we have seen how difficult it is to enter the semi market with leading-edge technology. Overall, we expect H2 to be slightly down versus H1 in wafer volumes. Our outlook in March included 2 scenarios. With some more visibility into especially Q3 of 2020, we now state our outlook more precisely in regards of sales, EBITDA margin, net cash flow and tax rate, while other KPIs remain unchanged. With wafer volume slightly down in H2 to pre Q2 levels, we expect sales to be down versus 2019 by a mid-single-digit percentage figure. In recent weeks, we have seen the U.S. dollar weakening against the euro. If this trend continues, the decline in sales might be somehow higher. EBITDA margin to be down by a mid-single-digit percentage points. Our net cash flow should be slightly below 2019 and tax rate will come in below 10%. I would like to conclude the presentation with a more general remark on the outlook for the wafer industry. If one considers the manufacturing lead time in the semi industry versus the one in the wafer industry, inventory adjustments, either upwards or downwards, will probably always happen. But these are short-term effects during a given year and often very hard to predict. The trend towards more digitalization was fueled by the corona pandemic, especially in H1 of this year. However, digitalization is generally driving semi and ultimately also wafer demand in the mid to long term. It clearly shows that the underlying growth trend of the wafer industry is intact. We believe that over the midterm, we will see the next tightness in wafer supply, even though we are not able to predict the exact timing. With this, we close our presentation and are now available for your questions. Operator, please open the Q&A session.
[Operator Instructions] And the first question is from Francois Bouvignies, UBS.
Can you hear me?
Yes, we can.
Yes. Great. The first one I had is on your visibility and outlook. So if we look at your comments for now the guidance of mid-single-digit decline for revenues in 2020 versus '19 after a strong H1, it looks, Chris, that it seems more that you think is going to happen, not really what you see. So I was just wondering how the visibility is at the moment. Is it something that you already see clearly in Q3, Q4 happening when you say like inventory correction in some areas and the volumes will be down versus H1? Or is it something that you think will happen because the visibility remains low? So I just wanted to clarify this point, meaning are you very more conservative than anything else? That's the first question.
Well, first of all, Siltronic was never over optimistic in the outlook, but we are not overconservative either. Let's take the example of the automotive industry. New cars sold were down in the first half of the year around the globe by 35%. Did we see a comparable decrease in wafer demand from automotive customers? No, we didn't. So this stuff must be somewhere. And therefore, we think that the corona effects are coming into the wafer suppliers significantly later than into, for example, the automotive or smartphone industry. Smartphones were also down, and yes, there was in Q2, for example, in China, there was a slight recovery, but it's only something like comparable to prior year. So it came back to the usual level, but there was no catching up with missed opportunities in Q1. And automotive industry in China was also comparable to the previous period, so there is really no catch up. So the visibility that we have is, of course, let's say, relatively good for Q3. I think we know what will happen. We have already plenty of orders placed from customers. But at the end of the day, we always know that even if they promise to take stuff if at the end of the day, they don't need it, they won't take it. So there is not a lot of uncertainty regarding Q3, but there is some uncertainty regarding Q4.
Okay. Okay. That's great. So just a question on the long-term agreements. I mean on how do you see the rest of the year going. So with your customers having more visibility maybe and yourself as well how do you see the negotiation going? Do we -- I mean, should we expect some new contracts signed? I mean, if we see a very strong outlook for 2021 from a low base, for example, do you see an activity more around the negotiation of LTAs?
Typically, in -- we are now in early Q3, in early Q3, there are no negotiations for 2021. Full stop.
Okay. That's very clear. But do you expect the negotiation to come then later in Q4, if it's -- or do you think that it's equally split?
Typically, the negotiations for next year are always in Q4. They are a little bit in the early part of Q4 when the pressure is on the customer and when there is not so much pressure on the semiconductor industry, and sometimes they are also only towards the end of the year, the end of the quarter.
And do you expect the pandemic to have an impact on this negotiation versus the year before? Or...
If you tell me how the pandemic will continue in the second half of the year, then I can answer your question.
Okay.
Nobody knows how it will develop.
No, I won't go there. And the last question I had is on Intel that announced maybe they will change maybe the overall strategy. Intel is reported as one of your top customers. So I was wondering if Intel in, let's say, 5 years, decide to go towards the foundry business model, how it would impact Siltronic? Because obviously, you have different market shares by customers. So I was just wondering how do you think -- how do you view these announcements for you?
Well, the most important is whether Intel produce itself or whether they go to a foundry, they still need the wafer. So at the end of the day, it will not have an impact on overall wafer demand. And it's not only that we have a good supply position at Intel, we also have it at foundries.
And the next question is from Mr. Harchandani, Citigroup.
Amit Harchandani from Citi. My first question, if I may, goes back to the outlook that you have provided this morning. If I do back of the envelope math calculation, it suggests that you're guiding for revenues in the second half of the year versus the first half to be down about EUR 40 million and the EBITDA to be also down in the range of about EUR 40 million, which implies an EBITDA margin in the range of about 24%, 25% in the second half of the year. Could you then help us understand the different moving parts, please, here? Because the negative operating leverage seems stronger than what I would have anticipated, particularly with the freight costs also going away starting Q3. So if you could help us better understand in terms of maybe FX volume, pricing, mix. What are the moving parts that explain this move in EBITDA or the implied move in EBITDA in the second half versus the implied drop in revenue?
Amit, well, thank you for your question. Of course, it's a valid one and I think your calculator works fine, but we don't -- we gave a much more precise guidance for the total year than we did earlier because there we had 2 scenarios, but we will not divide now the effects into this is pricing, this is product mix, this is quantity, this is small diameter, this is large diameter. Let's leave it like our outlook was presented earlier there today.
Okay. So if I may then phrase it slightly differently. Could you give us a sense for how you expect pricing to evolve directionally in Q3 and Q4?
Well, I think we said that -- we also have said earlier that it's somehow flattening out. There is not so much price pressure in the market. But we also said that we have a negative effect coming from product mix. And this is more severe than what we had in the past.
Okay. The next question, if I may, again, because I'm just trying to reconcile the EBITDA margin implied, which seems quite low is are you seeing anything out there in terms of the competitive environment? Has the pressure changed from competition? Could you give us a sense for maybe the industry utilization for demand and supply? Just a feel for what's the situation out there.
Well, I -- in our scenario, our position in the market does not change significantly. There is no -- you have slight variations to the left, to the right, a little bit 0.6%. But not significant, it's simply the market. And it's not that competition is getting stronger, and therefore, we have lower volumes in the second half of the year. No impact from competitors, it's the market.
Okay. Okay. And final one, if I may. Listening to some of the customers up in the supply chain. There seems to be some optimism around 2021. I fully appreciate we have the situation with the pandemic, but then because of digitization trends, there seems to be some confidence into 2021. At what stage do you think you and the wafer stage of the supply chain would start to see some more clarity and optimism coming through, is it in Q4 when you have the renegotiations of the LTAs? Or would -- your experience tells you that it's typically likely to be more in the first half of '21 when you start seeing some of that visibility coming through?
Well, I think part of the optimism, not only in the semiconductor industry, but in general, is coming from the fact that sometimes in, let's say, late May to end of June. And during that time frame, the world was, let's say, at least in Europe and in large parts of Asia, convinced that the pandemic is somehow under control. And today, I'm sorry, wherever -- in whatever country you look of the world, it's not under control. And we see already negative impact coming from people traveling much more. And therefore, it's close to impossible to predict what pandemic will do in the next 3 to 6 months. And this will have a major impact on the recovery. The recovery can only happen if there is really a control of pandemic, and that's not a given.
The next question is from Florian Treisch, Commerzbank.
Yes. Not too much left, but 2 smaller ones. One is more a housekeeping one. Your noncontrolling interest part has been down to like EUR 6 million on average after more or less EUR 9 million per quarter in 2019. I assume it's around your Singapore fab. Is that just lower profitability? Or is there something we have to keep in mind when it comes to whatever investing into new crystal-pulling hall? Or is that just from an operational perspective? And the second part is as you stated, the 300-millimeter epi wafer demand remains strong and it's probably staying strong. Is there any intention to more dramatically shift volumes towards epi wafers as some part of your 300-millimeter capacities are probably idle at the moment and are unlikely to be fully utilized anytime soon?
Florian, the first question, noncontrolling interest. I think it's very simple. I mean, as you pointed out that Samsung share in SSW and the reason that is fluctuating is basically that this is a fab that produces 300-millimeter polished and has a somehow different product and customer mix than Siltronic overall.
Yes. And let me try to give you an answer on 300, specifically on 300 epi. We saw additional epi demand since quite some time. We added reactors in Germany. We continue to add reactors in Germany, so the epi capacity will go up. And as the total -- and assuming that the total capacity is unchanged, it will, of course, then have an impact on reduced polished capacity.
The next question is from Achal Sultania, Crédit Suisse.
A couple of questions, Chris. First on the mix, you mentioned that the impact in the second half of this year from product mix will be a bit more severe. So can you just explain a little bit more as to what's causing that? Is it all driven by the float zone product in autos? Or is there something else going on? And then secondly, if you think of more like longer-term about the DRAM node transition that is going on or that will go on going to 1 alpha and 1 beta node, like what are you hearing from your customers in terms of like bits per wafer that can be actually achieved? Are you hearing that there is a chance that the improvement or the efficiency that we've seen on the 1X to 1Y node, the pace actually slows down once customers go to 1 alpha-1 beta? And could that be a meaningful positive for the whole wafer industry? Any color on that would be helpful.
Well, I think, first of all, on the mix, I already answered it indirectly. We saw worldwide minus 35% cars sold in the first half of the year, and we didn't see it in the wafer industry. So we will see the impact in the second half of the year. And for automotive applications, in many, many cases, these are special products. It's not only float zone, it's also highly doped arsenic, highly doped red phros. And these products typically have ASP, which is above the average. And if the share of above-average ASP is going down, then it has a negative mix impact. Yes, design rules, yes, you're right. It's a continuous process, but it's slowing down. Up to now, we always saw that on one side, we have bit density growth and we have bit demand growth. And bit demand growth, let's say, in a given period was typically higher than bit density growth. And as we are convinced that bit demand growth will continue and bit density growth might slow down, it will have a positive impact on the wafer industry like it had in the past. So there is no change in that scenario.
The next question is from Jürgen Wagner, MainFirst Bank.
You achieved further cost improvements in Q2, how much more room do you have since you have done a lot already? And the second question, yes, you said that the corona or the pandemic is still with us, looking at longer-term demand drivers for you or for all wafer makers, where do you see them now versus, yes, to your view before we had the corona spread?
Well, let's take the second question first. One day, we will be back to a more normal environment. But some people at the beginning of corona tended to believe that it will be a V-shaped recovery. I think the likelihood of a V-shape recovery is very, very low. We saw that at least in China, although the shops were open and people could go shopping, there was no catch-up in smartphone sales. There was basically no catch-up in new cars sold. It was back to normal level, but not a catch-up. I do believe that the smartphones, it really depends on 5G development, how fast we will come back to prior-Coronavirus level. And for the car industry, I think it will take years. It will take years to come back to a level of 2019. So while answering your second question, I -- sorry, I forgot the first one.
Cost improvement.
Yes, the cost improvement.
Yes, well, cost improvement. Right. Yes. There's always additional things you can do. And most of the cost improvements will simply continue because of the productivity effect. So if we increase productivity in this, then our productivity in production by 8%, then we use -- we have 8% less payroll cost than we had in the prior period. And compared to prior year, this will continue in the second half, whether we will have additional increases in productivity in H2 compared to H1, that's very difficult to predict.
Okay. But there is more room, as you said, more to come, compensate. Okay.
The next question is from Robert Sanders, Deutsche Bank.
Chris, could you maybe just comment on the trend you saw in the second quarter by month? I mean I'm just interested, you had this very strong Q2, but I'm interested whether that was a function of a kind of panic in the supply chain. And I guess maybe you can give your thoughts about why automotive semi companies didn't cut orders until -- why they haven't cut orders in Q2?
Well, this is a question you have to ask our customers and not us. When the customer places an order, we fulfill the order and we do not question whether the customer really needs it. So -- and I do not remember that I commented it Q2 month by month. I think it was simply a strong quarter and we didn't talk about the monthly development. There is a competitor somewhere in Asia, they always publish revenue figures per month or there are even 2 players, we don't do that.
Got it. And in terms of your assessment of industry capacity and expansion versus demand, has that changed at all in the last 3 months? Have you -- do you think the industry is adjusting its expansion plans in light of coronavirus? Or you think that it's kind of business as usual and you haven't seen any signs of any of your competitors or yourself changing your plan?
I think -- well, first of all, very short answer is no. Our view didn't change in the last 3 months. We had 6 million wafers shipped in Q1. I do remember the first 2 months is what was total shipment according to semi was 6.4 million, respectively, 6.5 million. We believe that installed capacity is somewhere around 6.8 million and shell capacity is 7.2 million, so we are already in a relatively high utilization. I do believe that this remaining portion, the gap between the 6.8 million install capacity and the shell capacity of 7.2 million is something like 400,000 wafers. And 400,000 wafers is a little bit more than 5% calculated on the basis of 7.2 million. And therefore, it's not a major impact. But I assume that these 400,000 additional wafers will be completely built out sometime during next year.
And the next question is from Veysel Taze, Bankhaus Lampe.
First one would be on the short term. You mentioned during your presentation that Q3 visibility is quite good. And we know that your quarterly negotiations are partly taking place at this time around early parts of Q4. And my question would be, if you look at the Q3 commitment from your customer, and let's assume they are willing to take the volumes they agree today, would you still see H2 versus H1 weaker? Some color around that would be really very helpful.
The answer is yes.
Okay. That was short, but good answer.
You see if the customers fulfill what they promised to do, this is what we expect, the...
And fully, all customers.
The uncertainty is more on Q4 than in Q3.
Okay.
Please remember that there is an FX shift going on. I mean, the average was $1.10, and we are currently at $1.17, which was a EUR 6 million -- percent change in revenue per year, which would be EUR 3 million per half year.
Yes, exactly. I mean that was my point. If you built some conservativeness regarding FX expectations for the second half in your forecast. That was the point I was trying to figure out there. Okay. And then my second question would be on -- I mean, in logic and foundry, a lot of things are happening right now. One of the colleagues mentioned Intel. I was wondering on which level is -- are you competing with the other players in wafer market on the customer basis? I mean, one element is for sure, price, but what are the other elements that you are competing? I mean like for TSMC or other logic players, apart from prices, what are the key points you discuss with the customer or a customer decides for Siltronic and not for somebody else? What is the more than beyond price, so to say?
Well, first of all, it's a given that you must have the right product in the right specification in order to fulfill customer needs, and when you look at leading-edge technology, leading-edge technology not everybody is qualified, the TSMC, for example, we are qualified. So there, we have somehow an advantage not compared to all competitors, but to some of them. And this is -- the differentiation point is technology on one side and the other one is pricing.
Okay. And usually, this leading-edge logic players, if they start a new or transition to the next node, how many wafer players today do they take and share their specification for this node? I mean usually, the top 5 or 4 or 3?
At the end of the day, they want to -- their desire is to have all of them qualified. But typically, they start the development with 1 or 2. And as soon as they go into the commercialization phase, I think they always have 2 qualified suppliers. But 2 qualified suppliers is not enough.
Okay. And then my final question would be on the memory end market. Your comments around memory has not really changed from Q1 to Q2, so stable, but no improvements there. Would it be fair to assume that really, for the memory space, 2 factors would be key? The first, demand in server market continues, and the second that the smartphone market comes really back either through higher volumes or higher 5G? Or what would be the effect in memory space?
I think that's a fair assumption. Yes.
Yes. Okay.
[Operator Instructions] And we have a follow-up question from Mr. Harchandani, Citigroup.
Chris, I was wondering if you could maybe help us better understand your exposure to the automotive end market. Clearly, you talked about some of the specialized products, which have higher ASPs, is there a way you could help us get a feel for what is your revenue exposure to the automotive end market, given that it's likely to be challenged over the next 12 to 24 months in terms of the share of 200 million of the wafer output? Or maybe you could give us a sense for the differential in ASP pricing. Any ballpark numbers that would help us better understand the impact of automotive and market on your sales, please?
Well, I think I made in the Q1 call, I made a statement regarding the automotive industry. And we tend to believe that the share of automotive application is around 8% worldwide, and we are slightly higher. And to do the math, you assume simply that we have a 10% exposure to the automotive market. And then you can calculate whatever negative impact, how much that is down. And then at the end of the day, it translates into a decrease in revenue compared to prior year.
Okay. And just to be clear, the 8% and 10%...
No, I think I may then calculate. Let's assume we have a 10% supply chain in automotive, and let's assume that automotive is 20% down in 2020 compared to prior year. This is around EUR 25 million. And I made the statement, is that a disaster? No, it's not. But it's not nice. We don't like it.
Got it. Got it. And could you comment on the ASP differential for some of the specialized products versus, say, some of the polished products? Is it 2x, 3x, less than that or is it just...
Well, Amit, I fully understand that you have to ask that question, but I hope you understand that I have to not answer that question. We always talk about ASP for the total company. And I think it's not new to anybody that special products has a higher ASP than plain vanilla products. We all know that float zone has a higher ASP. We all know that epi has a higher ASP, but now to give you a percentage by how much does that differ from other products, no, we won't do that. I'm sorry. I hope you understand.
Absolutely.
And we haven't received any further questions. So I hand back to the speakers for closing remarks.
So thank you, operator. Thank you all for participating in today's call. And I hope we all hear you again on our Q3 release, which is on October 29. Wish you all a good day and stay safe and healthy. Goodbye.
Bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.